The leveraged finance divisions of investment banks have had a tough 12 months. Senior bankers, seemingly firmly ensconced on the sell-side, are now aching to make the move to a private equity firm.
As someone in a senior role who works for a large private equity firm in the UK, I have suddenly been deluged with CVs from highly-competent and very experienced leveraged financed professionals. There’s one big problem they face, however – moving to PE is a young man’s game.
As you’ll probably know, leveraged finance divisions of investment banks are happy hunting grounds for private equity firms, but this is at the junior level. They know modelling, presentations, and comping, but they’re also used to long hours and are willing to do the grunt work. Senior bankers, meanwhile, have very little chance of making it across to the buy-side.
But let’s assume you’re aiming for the improbable and trying to jump to PE after a long career on the sell-side. These are the only reasons that a private equity firm will ever consider hiring someone senior from an investment bank – they’re growing their business, they’re heading in a new strategic direction (think new target sectors or increased deal size), or someone leaves. Believe me, people rarely leave in private equity thanks to carried interest.
To save clogging up my inbox with irrelevant CVs, let me tell you what will impress a private equity firm. Firstly, consider your target carefully – the only PE firm that will hire leveraged finance professionals right now are the larger funds (£1bn plus on commitments for their largest fund). So, ignore the tiddlers.
Then there’s your deal experience. Right now, bankers who have experience of providing a debt financing solution from beginning to end will get more than a two second glance at their resume. What does this mean in practice? Well, structuring a deal, engaging private debt funds and other specialist providers of financing, exploiting relationships with debt advisors, being connected to several heads of leveraged finance origination/sponsor coverage and capital markets teams, and being able to run a syndicated loan financing or possibly even issuing a high yield bond. Sound feasible? Good, now here’s the next part.
You need know the right people. Mid- and senior-level hires are rarely found through recruiters and more commonly come through personal networks and exposure to private equity manager deal leaders. If they haven’t worked with you previously, it’s still unlikely that a PE manager will hire you.
This is down to culture. Everyone harps on about this, but culture is a nonsense when you’re talking about a team of 120 leveraged finance bankers at a bulge bracket firm. It’s absolutely key when you’re working in a deal team of 10 people in PE. So, it helps to be a known entity. It’s most common for PE firms to hire a leveraged financier straight out of the bank that has just structured and funded a relatively large and complex financing for them.
This is where networking, personality and reputation count. If you have not invested the time during the early years of your career to making a name for yourself and developing a network outside your bank, it is unlikely you will uncover these roles.
For every PE role available there are hundreds of candidates. Realistically, to stand out you need to have worked on some top deals and have spent time developing your network outside of the bank (especially clients). You might then just have a chance. Otherwise, spare my inbox please.
Jamal Bahir (a pseudonym) is a partner at a private equity firm in London